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MCA debt relief

BY Value Capital Funding

March 25, 2024

Maximize Your Assets and Use Cash Out Refinance to Pay Off MCA Debt

Maximize Your Assets and Use Cash Out Refinance to Pay Off MCA Debt

daily or weekly repayments can strain your cash flow and limit your ability to invest in growth. If you’re looking for a strategic solution to free your business from the clutches of MCA debt, consider cash-out refinance, which is a form of MCA Debt Relief

What is Cash-Out Refinance?

A cash-out refinance allows you to tap into the equity you’ve built up in your property – residential or commercial real estate, or valuable equipment  – to secure a new loan with a much lower interest rate and better terms. The loan amount typically reflects a percentage of your property’s appraised value, minus your existing mortgage or debt balance. Unlike traditional refinancing, which replaces your existing mortgage with a new one, a cash-out refinance provides you with a lump sum of cash in addition to paying off your previous loan. You can then use these funds to strategically pay down high-interest debts, including MCAs.

Leverage Real Estate Assets

Many small business owners own commercial property or have built equity in their homes. Cash-out refinance allows you to leverage this asset to your advantage. By strategically utilizing the funds obtained through a cash-out refinance, you can:

  • Pay Off MCA Debt: Freeing yourself from the high fees and daily/weekly repayments of MCAs can significantly improve your cash flow. This allows you to reinvest in your business, hire new staff, or pursue expansion opportunities.
  • Consolidate Debts: If you have multiple debts with varying interest rates, a cash-out refinance can help consolidate them into a single loan with a potentially lower interest rate. This simplifies your repayment process and potentially saves you money on interest charges.
  • Improve Your Credit Score: Settling high-interest debt with a cash-out refinance can positively impact your credit score. This improved creditworthiness can be beneficial when seeking future financing for business growth initiatives.

Benefits of Cash-Out Refinance

Here are some key advantages of utilizing a cash-out refinance to tackle MCA debt:

  • Lower Interest Rates: Cash-out refinance loans typically offer significantly lower interest rates compared to MCAs. This can result in substantial long-term savings on your debt repayments.
  • Extended Repayment Terms: Cash-out refinance loans often come with longer repayment terms compared to MCAs. This translates to lower monthly payments, providing much-needed breathing room for your business cash flow.
  • Immediate Debt Relief: By using the cash obtained from a cash-out refinance, you can pay off your MCA debt in full, experiencing immediate financial relief from its burden.

Risk Assessment and Mitigation

While cash-out refinance offers attractive benefits, it’s crucial to consider potential risks:

  • Increased Debt: You’re essentially taking on additional debt with a cash-out refinance. Carefully evaluate your financial situation and ensure you can comfortably afford the new loan payments.
  • Potential for Property Loss: If you default on the new loan, you risk losing your property through foreclosure or asset seizure. Make sure you have a solid repayment plan in place before proceeding.
  • Closing Costs: Cash-out refinances typically involve closing costs associated with loan origination and appraisal. Factor these costs into your overall financial assessment.

Mitigation Strategies:

  • Consult a MCA debt relief specialist: Discuss your specific situation with a qualified MCA relief advisor to determine if a cash-out refinance is the right strategy for your business.
  • Develop a Budgeting Plan: Create a realistic budget that factors in your new loan payment and ensures you can stay on track with your financial obligations.
  • Explore Alternatives: Consider other debt relief options, such as MCA debt negotiation, restructuring, or consolidation, alongside cash-out refinance to create a comprehensive solution.

Case Studies: Successful Debt Settlement with Cash-Out Refinance

Many businesses have successfully utilized cash-out refinance to escape the cycle of MCA debt. Here’s an example of how a restaurant chain leveraged this strategy:

A Local Restaurant Chain Overcomes Crippling MCA Debt

A popular regional restaurant chain, known for its delicious Italian cuisine, found itself struggling under the weight of $800,000 in MCA debt. The high daily repayments were severely impacting their cash flow, making it difficult to invest in essential upgrades and limit menu offerings.  They were forced to delay equipment repairs and forego marketing initiatives to keep up with the demanding daily repayments.

However, the restaurant chain owned its primary location, a well-maintained building with significant equity. Value Capital Funding recognized this as an opportunity and explored a cash-out refinance strategy. By leveraging the equity in their property, we were able to help them secure a $1,100,000 loan with a much lower interest rate and a longer repayment term, netting $300,000 in additional working capital.

This financial lifeline allowed them to completely restructure their MCA debt.  They used the funds from the cash-out refinance to pay off the existing MCAs in full, eliminating the burden of high daily repayments. The new loan offered a significantly lower interest rate and a more manageable repayment schedule, freeing up a substantial amount of cash flow for the restaurant chain.

With this newfound financial flexibility, the restaurant chain was able to:

  • Invest in Upgrades: They were finally able to address necessary equipment repairs and upgrades that had been put on hold due to the high MCA repayments. This improved the overall kitchen efficiency and ensured a better dining experience for customers.
  • Expand Menu Offerings: Freed from the cash flow constraints imposed by the MCA debt, they were able to invest in new ingredients and expand their menu with innovative dishes, attracting new customers and boosting revenue.
  • Enhance Marketing Efforts: The restaurant chain could finally allocate resources towards long-overdue marketing initiatives, including social media campaigns and local advertising. This helped them reach a wider audience and increase brand awareness.
  • Strengthen Financial Health: By replacing high-cost MCA debt with a long-term loan with a lower interest rate and longer term, the restaurant chain significantly reduced their overall debt burden and improved their financial stability.

This case study demonstrates how cash-out refinance, when strategically implemented, can be a game-changer for businesses drowning in MCA debt. It can provide immediate relief, free up crucial cash flow, and empower businesses to invest in growth and achieve long-term success.

Expert Insights from Value Capital Funding

At Value Capital Funding, we understand the complexities of MCA debt and the challenges it poses for small businesses. Our teams possess extensive experience in crafting customized solutions to help businesses navigate debt and achieve financial freedom. If you’re considering cash-out refinance as an option to tackle your MCA debt, we can guide you through the entire process:

  • Free Consultation: Schedule a free 15-minute consultation with a dedicated debt relief specialist to discuss your unique situation and explore the feasibility of cash-out refinance for your business.
  • Financial Assessment: Our specialists will conduct a comprehensive review of your financial health, including your assets, liabilities, and cash flow. This assessment helps determine if cash-out refinance is the right strategy and identify any potential risks or roadblocks.
  • Tailored Solutions: We don’t offer a one-size-fits-all approach. Our team will develop a personalized plan that considers your specific circumstances and financial goals. This plan may involve a combination of strategies like cash-out refinance, MCA debt negotiation, or debt consolidation, whichever best suits your needs.
  • Expert Guidance: Throughout the process, you’ll have access to the expertise and support of our dedicated team. We’ll answer your questions, address your concerns, and ensure you make informed decisions about your financial future.

Unlock Financial Freedom: Choose Value Capital Funding Today!

Don’t let MCA debt hold your business back from reaching its full potential. Take a proactive step towards financial freedom. Contact Value Capital Funding today!

We offer a complimentary 15-minute consultation designed to assess your situation and explore a debt-relief strategy tailored to your business. Call us at 800-944-6280 or visit our website.

Don’t let MCA debt be the anchor holding your business back from reaching its full potential. Value Capital Funding can be your financial anchor, stabilizing your situation and propelling you forward. We understand the emotional and financial toll of MCA debt.  Our team is here to be your partner in navigating a debt-relief strategy that’s right for you.  Let us alleviate the stress of MCA repayments, so you can refocus your energy on what truly matters –  growing and running a thriving business.  Contact Value Capital Funding today and take the first step towards financial freedom.

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